The premium is calculated as a percentage of the total limit of indemnity and can be structured in a number of ways to suit the insured
The most common structures are deposit and contingent premiums, and staged premiums; however, we will consider other methods of premium payment. We do not offer fully deferred and contingent premiums.
Deposit and contingent premiums
Part of the premium (the deposit), is paid upfront, typically 18% to 20% of the limit of indemnity. A further 30% to 40% of the limit of indemnity is due only if the case is successful (the contingent).
The premium is paid at specified stages during the dispute with each premium instalment only paid if the relevant stage is reached. Typically, the overall premium is 30% to 40% and is paid in three stages. For example:
- Stage 1: 12% payable on inception of the policy
- Stage 2: a further 8% payable on exchange of disclosure lists
- Stage 3: a final 10% to 20% payable 60 days before trial
Some cover, like own side solicitor’s fees, will require a deductible. The deductible is the amount the insured will need to bear before the insurance pays. For example, a £10m limit of indemnity with a 25% deductible means the insured will take the first £2.5m loss. Deductibles are used by insurers to ensure that the insured has sufficient exposure to act reasonably.